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Selected Quarterly Financial Information | 12 Months Ended
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Dec. 31, 2012
Selected Quarterly Financial Information (unaudited) |
Selected Quarterly Financial Information (unaudited) | 14. Selected Quarterly Financial Information (unaudited) The following table presents selected unaudited financial data for each quarter of fiscal 2012 and 2011. Consistent with prior years, we report interim quarters, other than fourth quarters which always end on December 31, on a 13-week basis ending on the last Sunday within such period. The interim quarter ends are determined at the beginning of each year based on the 13-week quarters. The 2012 interim quarter ends were April 1, July 1 and September 30. The 2011 interim quarter ends were April 3, July 3 and October 2. For ease of reference, we report these interim quarter ends as March 31, June 30 and September 30 in our interim condensed consolidated financial statements. Although unaudited, this information has been prepared on a basis consistent with our audited Consolidated Financial Statements and, in the opinion of our management, reflects all adjustments (consisting only of normal recurring adjustments) that we consider necessary for a fair presentation of this information in accordance with accounting principles generally accepted in the United States. Such quarterly results are not necessarily indicative of future results of operations.
|  | Fiscal 2012 (unaudited) |  | Fiscal 2011 (unaudited) |
--- | --- | --- | --- | --- | ---
(in thousands, except per share data) |  | Q1 |  | Q2 |  | Q3 |  | Q4 |  | Q1 |  | Q2 |  | Q3 |  | Q4 |
Net sales |  | $ | 139,909 |  | $ | 136,547 |  | $ | 132,715 |  | $ | 106,849 |  | $ | 254,676 |  | $ | 264,815 |  | $ | 267,959 |  | $ | 191,685 |
Gross profit |  |  | 65,268 |  |  | 61,254 |  |  | 49,884 |  |  | 38,727 |  |  | 130,963 |  |  | 135,349 |  |  | 124,934 |  |  | 83,088 |
Income (loss) from continuing operations, net of income taxes |  |  | 16,462 |  |  | 11,011 |  |  | 7,698 |  |  | (8,642 | ) |  | 57,979 |  |  | 56,318 |  |  | 52,617 |  |  | 23,588 |
(Loss) income from discontinued operations, net of income taxes |  |  | (50 | ) |  | 807 |  |  | 4,055 |  |  | (413 | ) |  | (5,337 | ) |  | (37,112 | ) |  | (16,754 | ) |  | (3,312 | )
Net income (loss) |  | $ | 16,412 |  | $ | 11,818 |  | $ | 11,753 |  | $ | (9,055 | ) | $ | 52,642 |  | $ | 19,206 |  | $ | 35,863 |  | $ | 20,276 |
Income (loss) per common share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 0.43 |  | $ | 0.29 |  | $ | 0.20 |  | $ | (0.22 | ) | $ | 1.46 |  | $ | 1.37 |  | $ | 1.34 |  | $ | 0.62 |
Discontinued operations |  |  | — |  |  | 0.02 |  |  | 0.10 |  |  | (0.01 | ) |  | (0.14 | ) |  | (0.90 | ) |  | (0.43 | ) |  | (0.09 | )
Income (loss) |  | $ | 0.43 |  | $ | 0.31 |  | $ | 0.30 |  | $ | (0.23 | ) | $ | 1.32 |  | $ | 0.47 |  | $ | 0.91 |  | $ | 0.53 |
Diluted : |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | 0.42 |  | $ | 0.28 |  | $ | 0.20 |  | $ | (0.22 | ) | $ | 1.36 |  | $ | 1.31 |  | $ | 1.31 |  | $ | 0.61 |
Discontinued operations |  |  | — |  |  | 0.02 |  |  | 0.10 |  |  | (0.01 | ) |  | (0.12 | ) |  | (0.86 | ) |  | (0.41 | ) |  | (0.09 | )
Income (loss) |  | $ | 0.42 |  | $ | 0.30 |  | $ | 0.30 |  | $ | (0.23 | ) | $ | 1.24 |  | $ | 0.45 |  | $ | 0.90 |  | $ | 0.52 |
Weighted average shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 38,261 |  |  | 38,370 |  |  | 38,577 |  |  | 38,698 |  |  | 39,842 |  |  | 40,998 |  |  | 39,335 |  |  | 38,212 |
Diluted |  |  | 38,863 |  |  | 38,988 |  |  | 39,169 |  |  | 38,698 |  |  | 42,531 |  |  | 43,002 |  |  | 40,069 |  |  | 38,771 |
A variety of factors influence the level of our net sales in a particular quarter including economic conditions in the LED, solar, data storage and semiconductor industries, the timing of significant orders, shipment delays, specific feature requests by customers, the introduction of new products by us and our competitors, production and quality problems, changes in material costs, disruption in sources of supply, seasonal patterns of capital spending by customers, interpretation and application of accounting principles, and other factors, many of which are beyond our control. In addition, we derive a substantial portion of our revenues from the sale of products with a selling price of up to $8.0 million. As a result, the timing of recognition of revenue from a single transaction could have a significant impact on our net sales and operating results in any given quarter. CIGS Solar Systems Business Disposal On July 28, 2011, we announced a plan to discontinue our CIGS solar systems business. The action, which was completed on September 27, 2011 and impacted approximately 80 employees, was in response to the dramatically reduced cost of mainstream solar technologies driven by significant reductions in prices, large industry investment, a lower than expected end market acceptance for CIGS technology and technical barriers in scaling CIGS. This business was previously included as part of our LED & Solar segment. Accordingly, the results of operations for the CIGS solar systems business have been excluded from continuing operations in the foregoing selected quarterly financial information and disclosed separately as discontinued operations. During the year ended December 31, 2011, total discontinued operations include charges totaling $69.8 million ($50.7 million in the second quarter and $19.1 million in the third quarter). These charges include an asset impairment charge totaling $6.2 million, a goodwill write-off of $10.8 million, an inventory write-off totaling $27.0 million, charges to settle contracts totaling $22.1 million, lease related charges totaling $1.4 million and personnel severance charges totaling $2.3 million. Metrology Divestiture On August 15, 2010, we signed a definitive agreement to sell our Metrology business to Bruker comprising our entire Metrology reporting segment for $229.4 million. Accordingly, Metrology's operating results are accounted for as discontinued operations in determining the consolidated results of operations. The sale transaction closed on October 7, 2010, except for assets located in China due to local restrictions. Total proceeds, which included a working capital adjustment of $1 million, totaled $230.4 million of which $7.2 million relates to the assets in China. As part of our agreement with Bruker, $22.9 million of proceeds was held in escrow and was restricted from use for one year following the closing date of the transaction to secure certain specified losses arising out of breaches of representations, warranties and covenants we made in the stock purchase agreement and related documents. The restriction relating to the escrowed proceeds was released on October 6, 2011. As part of the sale we incurred transaction costs, which consisted of investment banking fees and legal fees, totaling $5.2 million. During the fourth quarter of 2010, we recognized a pre-tax gain on disposal of $156.3 million and a pre-tax deferred gain of $5.4 million related to the assets in China. We recognized into income the pre-tax deferred gain of $5.4 million during the third quarter of 2012 related to the completion of the sale of the assets in China to Bruker. Other Quarterly Items During 2012, we took measures to improve profitability, including a reduction in discretionary expenses, realignment of our senior management team and consolidation of certain sales, business and administrative functions. As a result of these actions, we recorded a $3.8 million restructuring charge consisting of $3.0 million in personnel severance and related costs, $0.4 million in equity compensation and related costs and $0.4 million in other severance costs resulting from a headcount reduction of 52 employees. We recorded $2.0 million of these charges in the third quarter of 2012 and $1.8 million of these charges in the fourth quarter of 2012 with the balance recorded in the first quarter of 2012. During the fourth quarter of 2011, we recognized a restructuring charge of $1.3 million for personnel severance related to a company-wide reorganization. We also recognized an asset impairment charge of $0.6 million for property and equipment and $0.8 million inventory write-off charged to cost of sales related to the discontinuance of a certain product line in our LED & Solar segment. During the third quarter of 2011 there was overstatement in our discontinued operations tax benefit totaling $3.4 million. We corrected this error in the discontinued operations income tax provision in the fourth quarter of 2011 for the same amount, representing the amount not previously recorded in the third quarter of 2011. We do not believe that this difference was material to our results of operations for the third and fourth quarter of 2011. As a result of the delay in filing our Form 10-Q for September 30, 2012 ("Q3 10-Q"), we were required to evaluate the impact of events and circumstances occurring through the date of the filing of the Q3 10-Q. After considering declines in systems shipments and parts usage occurring though the date of the filing of the Q3 10-Q, we determined that an increase in our reserve for slow moving and obsolete inventory was warranted and resulted in us recording a total charge of $7.2 million to cost of sales in the third quarter of 2012. We anticipate that the evaluation will also result in relatively lower provisions for inventory reserves over the first three quarters of 2013. We recorded a $1.8 million charge to cost of sales for inventory write downs in the fourth quarter of 2012 that related to a terminated program. The effect on the comparative statements above was to reduce gross profit for September 30, 2012 compared to all other periods presented. Out of Period Adjustment As a result of our accounting review we identified errors in the consolidated financial statements related to prior periods. The errors were primarily attributable to the misapplication of U.S. GAAP for recognizing revenue and related costs under multiple element arrangements and accounting for warranties. We assessed the materiality of these errors, both quantitatively and qualitatively, and concluded that these errors were not material, individually or in the aggregate, to our consolidated financial statements in this or any other prior periods. During the course of our review, we identified net cumulative errors which overstated cumulative net income from continuing operations through December 31, 2011 by $0.6 million and net cumulative errors that understated net income from continuing operations in the six month period ended June 30, 2012 by $1.1 million. As a result, in the third quarter of 2012, we recorded adjustments to correct all prior periods resulting in an increase in income from continuing operations of $0.5 million.

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